The Information Technology and Innovation Foundation (ITIF) appreciates the opportunity to provide input on NTIA guidance regarding permissible use of BEAD nondeployment funds. These supplemental remarks provide additional information and considerations based on the other input NTIA has or is likely to receive.

First, as ITIF argued at the February 11 Listening Session, both the statute and the Assistant Secretary recognize the purpose of BEAD is to close the digital divide, so BEAD nondeployment funds should address the leading causes of the digital divide, namely barriers to home broadband adoption which includes affordability.[1] NTIA’s Benefit of the Bargain Round and tech-neutral reforms were a success, and they enable BEAD to close home broadband deployment gaps while creating a substantial pool of nondeployment funds. NTIA should guide these funds toward focused, targeted uses that address nondeployment causes of the digital divide, unlike broader and more open-ended affordability programs such as ACP.[2] Providing states guardrails within which to operate targeted, consumer-focused voucher programs for truly low-income households who need and want support will maximize BEAD’s chances of closing the digital divide.

Second, while there may be beneficial uses of nondeployment funds beyond addressing adoption barriers, such as affordability, some parties have suggested uses of funds for which NTIA should carefully consider the tradeoffs. For example:

1. NTIA should not permit BEAD funds to subsidize things that would otherwise be profitably accomplished by private parties. For example, the expansion of infrastructure for artificial intelligence (AI) is an important national priority, but it is also a profitable business. We should, therefore, expect AI companies and those who reap private benefits from AI to fund their own infrastructure without federal subsidies.

2. Some parties proposed reserving nondeployment money for potential defaults or new locations. NTIA should be cautious about adopting such proposals. While some defaults may be inevitable, they will signal that NTIA should reevaluate defaulted locations to see whether technological or economic developments now serve the area (e.g. could it now get LEO service?). The fact that one company fails to comply with its BEAD obligations does not entail that the marginal dollar will do more to close the digital divide by seeking another deployment rather than supporting adoption efforts.

3. This principle also holds for newly constructed homes. While newly built homes are inherently “unserved” before they’re built, they don’t necessarily need federal subsidies to get broadband. Those building homes now should expect to bear the cost of all necessary parts of making that home livable: that includes a roof, doors, and broadband. Moreover, private broadband companies have already widely deployed, so NTIA should investigate whether those providers are likely to offer service to newly built homes, not immediately declare them a market failure in need of a federal solution.

4. State and local permitting processes can be a significant barrier to broadband deployment, but NTIA should ensure that nondeployment funds do not subsidize inefficiency or red tape. NTIA and states should prioritize a regulatory environment friendly to broadband deployment, rather than paying the ransom for projects held hostage by unreasonable permitting processes. There is a risk that additional funding for permitting processes empowers busybody regulators to further hold up permitting applications in a way that eats up funding without accelerating deployment. Insofar as NTIA allows nondeployment funds to be used for state and local permitting, it should ensure the funds accelerate otherwise reasonable permitting processes.

5. Finally, NTIA should reject calls to not use nondeployment funds and instead claw them back from states. This approach is contrary to the letter of the law, which contemplates the funds as grants to states for enumerated purposes that NTIA may expand but not contract.[3] It is also contrary to the explicit policy goal of the statute, which is to close the digital divide.[4] Since the digital divide has deployment and nondeployment components, it is simply incorrect to say that solving the deployment component means NTIA has accomplished the overall statutory purpose. NTIA should reject revisionist claims about the purpose of the statute and adhere to its text.

Combined Remarks for NTIA BEAD Listening Session

The goal of BEAD is explicit in the statute: close the digital divide.

There may be many worthwhile uses of the remaining funds, but the question is which of them will help achieve that goal. If states cannot spend money to address the broadband adoption gap, BEAD will not achieve its goal of closing the digital divide in America.

The statute recognizes this reality and specifically authorizes states to use funds to remove barriers to broadband adoption. Broadband affordability is one such barrier. NTIA’s own data from the Internet Use Survey shows that 15% of the home digital divide is due to lack of affordability.

NTIA should enable states to create efficient affordability support: consumer-focused vouchers of no more than $30 per month for anyone over 135% of the federal poverty line, to help truly low-income households afford market-rate home broadband. Affordability gaps aren't in the same places as deployment gaps were, so this funding should be open to households statewide that meet the eligibility requirements.

While there are not enough remaining funds to support affordability programs indefinitely, there are sufficient funds to provide support for long enough that the affordability barriers of today are significantly lessened. The use of non-deployment funds combined with changing market dynamics, technological improvements, and reforms to other federal broadband programs can make impactful progress towards closing the digital divide for good.

This approach would make life more affordable for struggling American families while also adhering to the statutory goal of closing the digital divide.

In evaluating alternative proposals, NTIA must be wary of proposals that amount to overbuilding. There might be other good investments to make, and some may even be worthy of a government subsidy. But BEAD will have failed if it addresses only deployment and not the more significant causes of the home broadband digital divide, namely, affordability. Thank you.

Endnotes